Delmarva Delaware SOS Auction Prices Higher Than 2017 RFP For All Customers, But Residential 17% Lower Than Legacy Contract Being Replaced

The Delaware PSC recently released an auction report for Delmarva Power's procurement of electric SOS supplies in Delaware

The auction prices from the 2017-18 Delmarva procurement are higher than last year's procurement, largely due to higher capacity prices.

However, Residential and Small C&I prices (RSCI) for the auctions held during 2017-18 (for delivery starting January 1, 2018) were 17% lower than prices for tranches from the 2014-2015 auction, which are being replaced

Due to a transition from a three-year blended portfolio to a two-year blended portfolio for residential and small commercial (RSCI) SOS at Delmarva in Delaware (effective in 2020), the 2017-18 RFP for small volume customers procured a one-year product (as opposed to three-year products in the past, so pricing is not an apples to apples comparison between years).

The average winning prices from the 2017-18 RFP (for delivery starting January 1, 2018) were as follows:

Customer Type       2017-18 RFP 
RSCI                   $65.24
MGS                    $59.46
LGS                    $56.53
GS-P                   $52.07

Prices do not reflect transmission, the procurement cost adjustment, renewable portfolio costs, and the reasonable allowance for retail margin.

In contrast, results from the 2014-15 RFP, whose contracts are being replaced (for mass market customers), and the 2015-16 and 2016-17 RFPs are below ($/MWh):

Customer  2014-15 RFP  2015-16 RFP  2016-17 RFP
RSCI           $82.18      $63.60       $58.21
MGS               N/A         N/A       $54.70
LGS               N/A         N/A       $51.71
GS-P              N/A         N/A       $50.20

The 2017-18 residential/small commercial price of $65.24/MWh will be blended with the existing portfolio, with one-third of supply at the new price, one-third at the 2015-16 price of $63.60/MWh, and one-third at the 2016-17 price of $58.21/MWh.

The 2017-18 RFP saw six bidders participate, the same amount as 2016-17. The winning bidders from the 2017-18 procurement were Direct Energy, Exelon, NextEra, and Vitol

The percent of load, by customer class, to be served by each supplier for the 2018-19 delivery year is below (including suppliers winning tranches in prior-year auctions for a portion of 2018-19 small customer load):

Supplier          RSCI    MGS   LGS   GS-P
BTG Pactual         7%
Direct Energy              33%
DTE                13%
Exelon             13%     33%  100%  100%
NextEra            20%
TransCanada        47%
Vitol                      33%